BizSugar.com › Taxes › How Small Businesses Can Avoid a Tax Audit

The federal government thinks many small-business owners under-report their income, and thus has been cracking down on them to help shore up its own budgetary problems.

The message for you: The tax auditor might want to take a look at your books. So how can you avoid that?

Though it's unlikely you can dodge an audit forever — the IRS tries to audit businesses on a cycle of some sort — there are “red flags” that can make your return look extra suspicious. We spoke with Bill Fleming, managing director of PricewaterhouseCoopers office in Hartford, Conn., to get some ways businesses might lessen their chance of an audit.

Here are some possible ways he recommends: